The Wizarding World
Fantastic Beasts and Where to Find Them: otherwise known as the book that proves that your five-year-old fears about monsters under the bed (and in the forest, and in the garden, and in the lake) were 100% founded.
Because this book is entirely set on our planet, and in the same countries and cities that every single human person works and lives…but with one little difference.
When Newt Scamander goes to a tropical island, he isn't looking to check out the local birds and monkeys. He's more interested in stumbling across a terrifying shadow monster that eats its prey alive.
And we were worried about two-inch flying cockroaches.
Think of it this way—there's a wizarding world that runs parallel our non-magical world. That means it's a whole lot like our own…even many of the creatures look even look the same as non-magical animals.
Take the Crup for instance. If you use a Severing Charm on its forked tail, it winds up looking just like a Jack Russell Terrier. Easy-peasy lemon breezy. And Kneazles can be bred with cats to look less conspicuous to Muggles. (Think Hermione's cat, Crookshanks.)
Mr. Scamander even admits that Muggles know about some of the creatures in his book. Really, how could you hide all of them? Even if Muggles might not get all the magical details right, they definitely know that they've spotted doxies and unicorns before. You don't usually forget something like seeing a majestic pure white horse with a horn coming out of its head trot down Main Street.
Basically, the setting of this book is meant to give the reader a sense of magic and wonder. Maybe, just maybe, our mundane Muggle lives are actually filled with fantastic beasts that we can't see or just don't notice. Could Chizpurfles have made your toaster burst into flames last week? Or it might have been a Knarl who destroyed your garden…and not your two-year-old niece?
According to Newt: yeah.